|
|
 | | | |
- close
- close
- close
- close
This excerpt taken from the EBAY DEF 14A filed May 16, 2005. Approval of eBay
Incentive Plan
The Board of Directors, upon the recommendation of the
Compensation Committee, approved and adopted the eBay Incentive
Plan, which we refer to as the eIP, on March 17, 2005, to
be effective as of January 1, 2005, subject to the approval
of the eIP by eBay’s stockholders. The eIP is being
submitted to stockholders for approval so that payments to
certain executive officers under the eIP will be deductible by
eBay for federal income tax purposes as described below.
The eIP is an element of eBay’s overall compensation
strategy to align employee compensation with eBay’s
business objectives, strategy, and performance. The eIP is
designed to reward eBay’s employees for delivering
measurable results. The purpose of the eIP is to align
compensation with quarterly and annual performance and to enable
eBay to attract, retain, and reward highly qualified individuals
who contribute to eBay’s success and motivate them to
enhance the value of the Company.
As described below under “Federal Income Tax
Information,” Section 162(m) of the Code denies a tax
deduction to public companies for compensation paid to certain
“covered employees” in a taxable year to the extent
the compensation paid to a covered employee exceeds $1,000,000,
unless the plan contains certain features that qualify the
compensation as “performance-based compensation.”
The eIP is intended to satisfy the requirements for
“performance-based compensation” as required by
Section 162(m) of the Code. One of the requirements of
“performance-based compensation” is that compensation
be paid pursuant to a plan that has been approved by the
company’s stockholders. This is the first year eBay is
asking stockholders to approve the eIP. However, eBay intends to
administer the plan that is being submitted for stockholder
approval for 2005 in a manner almost identical to the Management
Incentive Plan that eBay has used in the past to motivate
employees to drive demonstrated superior results for the company.
In addition to asking for stockholder approval of the eIP, eBay
has structured the eIP to satisfy additional requirements of
Section 162(m) of the Code for “performance-based
compensation.” The Board believes approval of the eIP is in
the best interest of eBay and its stockholders. The eIP
motivates and rewards eBay’s employees for achievement of
strategic, operational and financial goals that drive
stockholder value, and will now be structured to be advantageous
for federal income tax purposes.
If the eIP is not approved by stockholders, it is currently
contemplated that eBay would continue to make awards under its
current Management Incentive Plan and that such bonuses to
“covered employees” would not be deductible under
Section 162(m) of the Code to the extent that (in
combination with other non-exempt compensation,
e.g., salary) they exceed the $1,000,000 limit. If the eIP
is not approved by stockholders, it is currently contemplated
that eBay would resubmit the eIP for stockholder approval in
2006.
|
| |||||||
